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CADDA Express Loan Program |
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PURPOSE ELIGIBILITY REQUIREMENTS 1. TYPE OF BUSINESS: Eligible businesses include most for-profit businesses (proprietorships, partnerships, or corporations). Refer to ineligible businesses section, page 2. 2. CREDIT ENHANCEMENT : The participating bank must need and request in writing CADDA's financial assistance. 3. USE OF PROCEEDS : - Land and building acquisition - Leasehold improvements/building renovations - Machinery and equipment - Inventory - Working Capital
4. REPAYMENT TERMS - Maximum five (5) to Twenty (20) years, depending on project up to 5 years - Inventory & Working Capital up to 10 years - Leasehold Improvements, Machinery & Equipment up to 20 years - Land and Building Acquisition, Building Renovations - Normally, the participating agreement will request the lender to consider purchasing CADDA's interest if the business becomes bankable through the use of a balloon-payment before maturity.
The borrower must have a satisfactory credit record, having established credit with a reputable firm and complying with the payments in a prompt manner, for at least 12 months. Any applicant that has not satisfied past due obligations will not be eligible for funding.
Normally, the borrower will be required to provide a minimum cash injection of ten percent (10%) for loans acquiring real estate and improvements, and twenty percent (20%) on loans buying equipment. The cash injection may be substituted with equity in other assets, pledged to secure the debt, on a case-by-case basis. 100% financing is prohibited, without adequate collateral as business equity.
The borrowers must demonstrate satisfactory management experience or the potential to manage the type of business they are expanding or starting. Management counseling in the areas of payroll tax form preparation, financial statement preparation, marketing, etc. may be required, at the discretion of CADDA and the lender. In addition, CADDA and/or the bank will require a qualified accountant to prepare the financial report.
The bank will be secured by a lien on the project assets. Personal guarantees from the owners will be required on all loans and additional personal collateral may be required to secure the guarantee. At the discretion of the bank, an appraisal may be waived for real property securing a small debt, by using the most recent county tax assessor's value for ad valorem tax purposes. Unsecured loans are ineligible. INELIGIBLE BUSINESSES AND USES 1. INELIGIBLE USE OF PROCEEDS - Relocating existing industry or business from one job market to another - Refinancing - Purchasing property for lease. - Speculating - Acquiring Ownership
- Non-profit businesses - Passive income or developer/landlord institutions - Lending and investment institutions - Media (newspapers, magazines, etc.) - Hospitals - Farming and agricultural production
LOAN PROGRAM FEATURES 1. LOAN AMOUNT Normally, the total loan amount should not exceed $150,000, assuming a funding percentage of 50% for each participant. However, the total loan may exceed $150,000 provided CADDA's participation is $75,000 or less and the lien is a shared pro-rata.
2. INTEREST RATE - Bank's interest rate, is determined by the bank and limited to no more than NY Prime plus 4% (may be fixed or floating). - CADDA interest rate will be reasonable.
The borrower must be the user of the assets acquired with the loan proceeds, and be an operating-for-profit business. The borrowers are not generally eligible if they plan to lease the project assets to a third party for its operation.
4. INSURANCE REQUIREMENTS The assignment of life insurance will be required equal to the loan amount. This requirement can be waived, at the discretion of the bank and CADDA. Hazard insurance for the value of the fixed assets securing the debt will be required.
The bank may require an environmental audit. This depends on the real property involved securing the loan.
The borrower may be required to execute a loan agreement that will require the borrower to accept, on a periodic basis, practical assistance with management, preparation of financial statements, and other matters involved in operating the business, from a person or organization designated by the bank. UTILIZING THE PROGRAM 1. PARTICIPATION CADDA staff will respond quickly to loan requests (up to $75,000 CADDA's share) to prevent unnecessary delays, provide the bank and business with cash quickly, and eliminate additional paperwork. Generally, the participation is shared equally with the Bank and the lien shared; CADDA funds no more than one-half of the loan and assumes CADDA's share of the risk. 2. APPROVAL PROCESS The Bank evaluates the applicant and approves the loan request contingent on CADDA's approval. 3. DOCUMENTATION If the applicant is approved, the bank completes the “Request for CADDA Loan Participation” form which lists the loan terms, encloses the required documents, and sends the documents to CADDA. Upon receipt of “Request for CADDA Loan Participation” form, CADDA evaluates the request and if approved, prepares and returns the following documents within two working days: a) Participation Agreements (Bank and CADDA executes) b) Compliance of Federal Laws Agreement (Borrower executes) c) Loan Agreement and/or Loan Modification Agreement (Borrower executes) d) Conflict of Interest Form (Borrower executes)
4. FUNDING PROCEDURE CADDA returns a check in the amount of its loan participation (not to exceed $75,000) with the loan documents, unless the use of proceeds is for construction. If construction is required, CADDA will issue a written commitment to fund it share of the permanent financing after construction is complete. 5. LOAN FEES CADDA charges no loan fees for this service. 6. LOAN CLOSING The bank and/or its attorney closes the loan, using the bank's note and other related documents. Only three (3) CADDA documents (previously referenced) must be signed by the borrower. 7. LOAN SERVICING The bank is the lead lender and services the loan. CADDA is available on an as-needed basis and will provide assistance at the bank's request. 8. LIQUIDATION/LOAN LOSS CADDA shares the security on a pro-rata basis with the bank and shares pro-rata in the event of a loss. FOR MORE INFORMATION CONTACT: WEBSITE: www.cadda.com 501 Gloucester St., Ste. 201, Brunswick, GA 31520 |